Turmeric farmers in the Erode district of Tamil Nadu reaped a rich harvest from the demonetisation move. The withdrawal of hive-value currency notes led to rise in prices of good quality turmeric to Rs 9,400 per quintal. The prices were hovering at Rs 7,500-8,500 per quintal three-four months ago.
But the optimism did not last long. Prices declined as the new season crop arrived in South India. However, expectations of rising production in coming harvesting season and fall in export demand in coming months have prices under pressure. Output is seen at 7 million bags because of higher sowing and favourable weather conditions, analysts said.
But import of the commodity by traders from countries like Pakistan, China, Haiti, Thailand and Jamaica is affecting local cultivators.
Turmeric termed a wonder spice is a part of every Indian household. Apart from adding taste and colour to a dish, it also has medicinal properties. Thus, the demand has been growing from segments like food preparation, cosmetics and medicines.
India is the largest producer, consumer and exporter of the golden spice. It produces nearly 75-80 per cent of the total turmeric output and accounts for 60 per cent of the global exports. The total global production of turmeric stands at 7-800,000 tonnes.
In India, the main turmeric growing states are Andhra Pradesh, Tamil Nadu, Karnataka, Maharashtra and Kerala. The major trading centres are Nizamabad, Duggirala and Warangal in Andhra Pradesh, Sangli in Maharashtra and Salem, Erode, Dharmapuri and Coimbatore in Tamil Nadu.
Farmers in India cultivate around 30 varieties of turmeric. Of them, popular ones are Alleppey finger, Erode, Salem turmeric, Rajapuri, Sangli turmeric and Nizamabad fingers.
According to analysts, the production forecast of 2015-2016 was lowered by the central government from 1.19 million tonnes to 852,000 tonnes due to drought-like situation in Maharashtra and Andhra Pradesh.
In April-December 2015-16, exports went up 6 per cent to 68,500 tonnes compared with 64,786 tonnes last year. Amid the shortage of good quality produce, shrinking stocks could act as supporting factors, which can keep futures above strong support levels. Any pickup in export and domestic demand from North India, which is anticipated, shall provide a good opportunity for buyers in the medium-term, analysts said.
The latest report by Religare Commodities said, “No strong trend was noted for turmeric as low trading activities kept uptrend limited. But prices found good support at these levels. Cash crunch issues had put pressure on prices. Overall, the trend remained firm on low stocks amid slowly rising export and domestic demand. They also ensured gradual recovery in prices. Fund­amentals remained strong on falling stocks and prospects of rising export and domestic demand in coming days. Due to demonetisation, trading activities had remained low – but are picking up. New crop arrivals are still far away. So any demand has to be met through existing stocks only.”
Some other analysts suggested that rising dollar vs rupee rates could help push exports. With spices exports rising, prices can find some support. Turmeric, apart from fennel and celery, also contributed significantly to the total spices exports during April-September 2016. Exports generally happen in the form of dry turmeric after polishing, fresh turmeric, turmeric powder, dehydrated turmeric powder, oils and oleoresins.